“On a winter afternoon four years ago, Hollinger International Inc.’s directors met with the company’s chief executive, Conrad Black, for an especially busy board meeting,” writes Robert Frank in today’s Wall Street Journal.

“Gathered around a mahogany table in a boardroom high above Manhattan’s Park Avenue, eight directors of the newspaper publisher, owner of the Chicago Sun-Times and Jerusalem Post, nibbled on grilled tuna and chicken served on royal-blue Bernardaud china, according to two attendees. Marie-Josee Kravis, wife of financier Henry Kravis, chatted about world affairs with Lord Black and A. Alfred Taubman, then chairman of Sotheby’s.”

“Turning to business, the board rapidly approved a series of transactions, according to the minutes and a report later commissioned by Hollinger. The board awarded a private company, controlled by Lord Black, $38 million in ‘management fees’ as part of a move by Lord Black’s team to essentially outsource the company’s management to itself. It agreed to sell two profitable community newspapers to another private company controlled by Lord Black and Hollinger executives for $1 apiece. The board also gave Lord Black and his colleagues a cut of profits from a Hollinger Internet unit.”

“Finally, the directors gave themselves a raise. The meeting lasted about an hour and a half, according to the minutes and two directors who were present.”

“The boards of scandal-plagued companies from Enron to Tyco have been heavily criticized for lax corporate governance and poor oversight. The board of Hollinger — a star-studded club with whom Lord Black had longstanding social, political and business ties — is emerging as a particularly passive watchdog. Hollinger directors openly approved more than half of the transactions that allowed Lord Black and his colleagues to improperly siphon more than $400 million from the publisher, according to a company investigation overseen by former Securities and Exchange Commission Chairman Richard Breeden.”

“Mr. Breeden’s 500-page report, which was released earlier this month, gives a detailed picture of a board that functioned like a high-society political salon, while neglecting its oversight responsibilities. Lord Black worked hard to win his directors’ loyalty, giving to their charities and holding dinners in their honor. As the scandal unfolded, director Henry Kissinger even tried to negotiate with the company on Lord Black’s behalf.”

“According to the Breeden report, plus interviews with directors and company officials, the board rarely asked basic questions to get the facts it needed, despite warning signs. In addition to the management fees and other payments, the report says the board retroactively approved Lord Black’s use of $8 million in company money to buy Franklin D. Roosevelt memorabilia, which he used to write a biography of the president. A company jet, a platoon of servants, four homes and a constant round of parties — all partly funded by Hollinger — were left largely unscrutinized by the board, according to the Breeden report.”

“Hollinger’s then-corporate counsel, Mark Kipnis, told investigators there was no need to ‘slip’ anything past the audit committee because they ‘routinely approved’ everything, according to the Breeden report.”

“Several Hollinger directors say in interviews they were misled by Lord Black about some transactions. Robert Strauss, 85 years old, a former ambassador to the Soviet Union who left the board in 2002, says in an interview that he asked limited questions at board meetings because, ‘I relied on Mr. Black, I confess.’ “